BlackBerry on Tuesday notched up impressive growth in software and patent-licensing revenue during its fiscal first quarter of 2016, but its hardware and services performance remains a cause for concern.
In the three months to 30 May, BlackBerry generated revenue of US$658 million, down from $966 million a year earlier. Software accounted for 21% of that sum; 12 months ago its contribution stood at just 7%.
"I am pleased with the strong performance of our software and technology business. This is key to BlackBerry’s future growth," said BlackBerry CEO John Chen, in a statement.
BlackBerry’s devices and services divisions are a different matter though.
During its fiscal first quarter, BlackBerry recognised hardware revenue on approximately 1.1 million smartphones, compared to 1.6 million a year ago. In addition, services revenue accounted for 38% of the Canadian handset maker’s total revenue. A year earlier, when BlackBerry was selling more phones and turning over more money, services accounted for 54% of total revenue.
"The business of providing mobility-related services to enterprises appears to be increasingly commoditised and there are players such as Microsoft and VMware who can afford to give these services away as part of a larger package," said Radio Free Mobile founder Richard Windsor, in a research note.
BlackBerry still has a future in enterprise mobility services due to its large customer base, but "how much revenue and profit it can generate from it is another matter entirely," he said.
BlackBerry notched up a $68 million net profit in fiscal Q1, up from $23 million a year ago. Operating income increased to $89 million from $20 million, while operating expenses fell to $221 million from $431 million.
"Our financials reflect increased investments to sales and customer support for our software business," sa id Chen. "In addition, we are taking steps to make the handset business profitable. We believe these actions are prudent and necessary to grow the business and we believe the remaining milestones in our strategic plan are achievable."
